The EUR/USD pair advanced toward 1.1620 during the Asian session on Wednesday, supported by a softer US Dollar (USD) following dovish remarks from Federal Reserve (Fed) Chair Jerome Powell. His comments reinforced expectations of additional rate cuts this year, bolstering the Euro (EUR) ahead of key Eurozone data. Traders now await the release of Eurozone Industrial Production figures for August, due later in the day.
Fed’s Powell signals further rate cuts
Fed Chair Jerome Powell stated on Tuesday that the recent slowdown in hiring poses a growing risk to the US economy, signaling the likelihood of two more rate cuts before year-end. Markets now anticipate a 25-basis-point reduction in October, bringing the policy rate to the 3.75%–4.00% range, followed by another cut in December.
Powell’s dovish tone pressured the greenback as traders increased bets on a sustained easing cycle, fueling demand for the euro.
Data delays deepen uncertainty amid US government shutdown
The ongoing US government shutdown continues to disrupt the release of key economic indicators, including the September nonfarm payrolls report. The Consumer Price Index (CPI) update has been postponed until October 24, just days before the Fed’s October 28–29 policy meeting. The delay adds to uncertainty surrounding the economic outlook and complicates the Fed’s data-dependent decision-making process.
Political developments in France support the euro
In Europe, French Prime Minister Sebastien Lecornu announced the suspension of the landmark 2023 pension reform until after the 2027 presidential election in an effort to calm prolonged political unrest.
“I will propose to parliament this autumn that we suspend the 2023 pension reform until the presidential election. There will be no increase in the retirement age from now until January 2028,” Lecornu said. The euro inched higher following the announcement as easing political risks supported regional sentiment.
Traders eye upcoming Fed speeches for direction
Market participants will closely monitor comments from several Fed officials scheduled to speak later on Wednesday, including Stephen Miran, Christopher Waller, and Jeff Schmid. Any hawkish signals could lend temporary support to the USD and limit further gains in EUR/USD in the near term.
